Will Europe's number 1 be split?

Hans Sohlström has been CEO of Stora Enso since 2023. At the end of last week, an outlook on his future strategy was given for the first time:

• Focus on the well-performing packaging sector
• Spin-off of Stora Enso-Forests into a new public limited company (market value: €5.7 billion)
• Group restructuring: Pauli Torikka takes over the Wood and Energy division, Lars Völkel moves to the top of the containerboard segment
• Due to "lack of synergies": possible sale of the South Business Unit, which was only newly formed in July

At solid wood giant company

For the Central European sawmill industry, the last point is by far the most important. 3 million m³/y of softwood sawn timber are produced in Austria, the Czech Republic, Poland and Latvia with 2,339 employees. In addition, there are enormous further processing capacities: 1.6 million m³ of planed goods, 310,000 m³ of CLT and 80,000 t of other products.

Three decades of roller coaster

Since the takeover of the Austrian and Czech sawmills from Gerald Schweighofer in 1998, there has been a changeable relationship between the headquarter in Helsinki and the Central European production units.

The company acted expansively at the beginning of the 2000s, when, for example, the Wimmer wood processing plants in Pfarrkirchen/DE and Ždírec/CZ were taken over. With managers such as Kickinger, Kainz and Pelkonen, the solid wood department became increasingly important. New markets were opened up worldwide, and CLT production started in Bad St. Leonhard/AT in 2008. Time leap by 17 years: Just in the month in which a possible sale is being discussed again, the one millionth cubic meter of CLT produced was celebrated there.

Paper or timber construction? Timber construction for the time being

With the appointment of Herbert Jöbstl as Senior Vice President in 2018, Central Europe's influence reached a peak. Until July of this year, he was responsible for all Stora Enso's Wood Products plants with over 4000 employees. Under Jöbstl, modern timber construction products at times seemed to become more important to the group than paper and packaging.

A significantly more complex decision-making structure than that of many competitors, combined with sites spread across Europe, long held back growth. Several far-reaching changes in strategy also led to a lower investment rate in the solid timber mills than comparable family-run companies.

There were already intentions to sell

Whether the Central European plants are sold depends largely on the willingness of potential buyers to pay. As early as 2012 – in the middle of the financial crisis – Mondi is said to have shown rumoured interest. However, the offer at that time was too low. Years of upswing followed with a global economic recovery and sufficient supply of raw materials. In 2023, international timber industries were again to submit bids for Stora Enso's plants. These did not convince the headquarter in Helsinki either.

Whether 2026 or 2027 will be a more favorable time to sell remains open. In addition, unlike in 2012, the question of supply must be completely reassessed: Is there enough coniferous wood to operate approximately all locations?

New course: Sawmill purchase to secure raw materials

The focus on the future industry of "packaging solutions" seems consistent. In the 1st half of the year, however, the share price initially had a different effect. Stora Enso acquired three Junnikkala sites – which could give the impression that sawmills are once again taking centre stage. In fact, the acquisition of Junnikkala (700,000 m³/y of softwood)  is mainly used to secure raw materials for the new production line for packaging paper in Oulu/FI, in which Stora Enso invested €1 billion.